Potato and daffodil supplier in March warns of profits fall

Paul Grinnell

Potato firm Produce Investments has announced a plunge in profits after a year of challenging conditions.

The fresh potato and daffodil producer, based in March, said its pretax profit in the year ending June 27 fell to £7.3 million from £8.6 million.

Angus Armstrong, chief executive of Produce Investments.

The company, which has operations across the UK, also announced in its final results that revenue had fallen from £191.8 million last year to £178.4 million.

But the company, which supplies the majority of UK leading retailers including Tesco, Sainsbury’s, Asda, Waitrose and M&S, firm has also revealed that it has won a three-year agreement at a fixed margin with one of its main retail customers.

However, it warned this deal had come with a reduction in overall volume of produce supplied starting from next July.

Chief executive Angus Armstrong said: “While this reduction...is clearly disappointing, we are extremely pleased to have achieved this arrangement, a first for our business, a signal of market confidence in Produce Investments and a positive step forward.

“Consequently, as a result of the reduction in volume, the company is currently reviewing its requirements across its packing facilities, aligning capacity to forecast sales and therefore ensuring that the business remains efficient and cost competitive.

“This may lead to the closure of its Kent-based packing facility.”

Mr Armstrong added: “We are confident that our recent acquisitions, coupled with the rationalisation of our fresh packing sites, places us in a much stronger position to deal with the external pressures facing our industry.

“The board, and the management team, remain confident that Produce Investments is well placed to grow organically and to take advantage of any acquisition opportunities that might arise in the future.”

The company has increased its full-year dividend to 7.165 pence from 6.825p.

It has also warned that it faces a financial hit of between £300,000 and £1.5 million after a contamination scare that caused a product recall.

Its Swancote Farms operations said in May that there was a possible issue with traces of metal being found in one of its products.

It prompted a recall of a number of potato salad and ready meal ranges.